Text Messaging – The Bell & Telus Profit Grab

In the middle of the Rogers and Apple iPhone PR blitz and resulting Canadian consumer rebellion — as evidenced by www.ruinediphone.com’s60,000-plus signatures — Bell and Telus announced they are going to begin charging for incoming text messages at 15 cents per message for customers not on bulk text messaging plans.

By timing it this way the companies may have hoped to slip quietly under the iPhone PR and the Rogers iPhone plan pricing backlash. Instead the media positioned it as a continuation of the consumer backlash story, just as the Rogers plan story was beginning to crest.

By introducing this additional charge, Bell and Telus will double their usage-based text messaging revenue with all the increased revenue coming in at 100 per cent profit. They currently collect 15 cents per message from the sender. With this change they will also collect 15 cents from the receiver.

This is a doubling of the price for text messaging without any change in the cost or the usage. Consumers were understandably upset and the media fanned the anger by publishing reports about confused consumers who worried that their text messaging charges would increase by hundreds of dollars.

Informing these heavy users that the additional charges could be mitigated by subscribing to bulk text messaging plans for $15 or so per month would not have made for the same sound bites.

Nonetheless, the release of the much anticipated iPhone, Roger’s mismanagement of the data plans and the Bell and Telus text messaging profit grab has further fueled the love/ hate relationship consumers have with their cell phone and cell phone carriers.

While consumers are heavily attached to their cell phones, across the board feel that they are being unfairly gouged by the wireless carriers.

This isn’t surprising, considering escalating System Access Fees, excessive long distance pricing, data pricing and the many small add-ons such as text packages and caller ID packages, all of which turn a $30 plan into a $60 bill every month.

The new Rogers data plans as well as the new charges for incoming texts add to the already confusing array of packages, options, unknowns, and pricing that every cell user faces. Whether intentional or not, this confusion works to the benefit of the big three cellular carriers.

When faced with the difficult task of comparing plans, options, and unknowns, consumer behavior dictates that, in general, consumers will avoid the stress by simplifying their decision. In this case, consumers simplify their shopping down to a brand, a phone, and a local minutes package, ignoring and passively accepting that they will be charged some unknown amount for everything else